In the absence of legal requirements or direct financial incentives, companies and individuals in a capitalist economy act in their own financial interest
Exactly. And part of a bank's own financial interest is to ensure that 1) it gets a return on its investment, and 2) it keeps the government from interfering in their ability to conduct business via regulations. So, it is in the best interest of all banks (and their shareholders) to not engage in risky loans so that they can maximize their returns and not raise the alarm of the government. Look how the banks all banded together during the crash of 2008 - a crash that they created due to lack of government oversite and their own greed (and with little to no oversite to this day). And, while a few banks failed, for the vast majority of them it was business as usual. In fact, during the crash, Amex was reducing people's limits right and left and closing accounts with no warning. Many of these were business customers who had been customers for years with Amex and had not the first late payment let alone a missed one. Many went out of business because suddenly their cash flow changed literally overnight. Amex acted in its own financial interest and it didn't care how many honest people it put out of business to do so. There was not government regulation telling them that they couldn't. After all, it was their money. Talk about angering customers.
Remember when the tobacco compaines were getting sued? How in the world did they have all that available cash to pay out the huge verdicts? Its because back in the 40s and 50s they assumed that one day they would get sued because they knew that the product they were making was bad for people. So, competitors joined together, invested money, and created a huge trust that the manufacturers could then draw from to pay these huge settlements so that they wouldn't go bankrupt when the lawsuits started rolling in. It was all about financial interest. All the companies knew that individually they would more likely than not all be doomed. Together, they all could weather the storm.
Look at "Citizens for Fire Safety." Sounds like a good, safe organization, right? One that is looking out for the best interest of you and your family. In fact, it was a trade organization made up of chemical companies that were in direct competition with each other. These companies made highly toxic fire retardent chemicals that were used in the manufacture of furniture. They all banned together to try to convince you and me that we couldn't live without fire retardant furniture while not telling us that we would die of cancer. They wanted to keep making a ton of money by selling toxic chemicals and didn't care how many people they killed doing it. They knew that if one company's chemical was banned, then everyone's would be. They joined together, not to sit around and chant "Give me an "S", give me a "P", give me an "I". No, they banned together to make even more money. In fact, they were in leauge with Big Tobacco who didn't want to have to make a self extinguishing cigarette 9it would cost more money to manufacture with no way to pass the cost on to the consumer) but wanted to convince Congress that the real danger lay in burning furniture - never mind that it was a lit cigarette that caused the furniture to burn in the first place.
It is far from a "generalized feeling of team spirit" and all about the dollar. By helping each other out, banks are putting more money in their own pocket. And believe me, they all have way too many customers to care about the few that get irritated due to hard pulls and the even fewer who just up and leave because a lender had the audacity to perform a hard pull credit check.
As to why some do and some don't when it comes to cell phones, utilities, cable, even some loans - who knows? All I know is that the vast majority of lenders do hard pulls when they check your credit. And they do it because ultimately it affects their bottom line.
And its time for me to go have a smoke. But not on my couch.
